Jim Houle: The Fantasy World of Costco…

Our City Manager fantasizes that a Big Costco Box will bring in great sales tax receipts and that the city will be able to pay off its indebtedness from the RDA fiasco, as well as new loans to build $6.2 million worth of access roads to Costco. This, they hope, will put the City on a sound financial footing. But there are a few problems with living in such a fantasy world:

There is no need for Costco: Ukiah people are not under-dressed nor poorly fed for lack of another big box discount store. We already have plenty of clothing stores, food emporiums, gasoline stations, and drug stores to meet our needs.

There is no money to build the new highway 101 interchange: The State Finance Department has said that the City Council cannot use revenue from the 2011 RDA bond nor from the expected sale of 15 acres to Costco to develop roads and interchanges needed to funnel shoppers into Big Box parking lots. Show us the money!

There is no adequate plan for the proposed interchange: The traffic engineers from Smith Engineering consider the traffic impact study conjured up by the City with GHD Inc. to be merely a “cartoon”, not a real design. CalTrans has not yet approved this undersized traffic circle.

Walmart is expected to re-apply for their superstore: This will make any interchange intended only for Costco traffic to be a fraction the needed capacity for shoppers converging on two Big Boxes. Thus the Traffic Plan will have to be done all over again and another tooth fairy found to pay for it.

No debt repayment plan: The City Council has not produced a Cash Flow analysis. It is highly unlikely that the revenues expected from sales taxes at Costco will be enough to pay off the old RDA bonds and the new loans the City hopes to get from “I-Bank” or other sources. If City Staff already has the funds, why don’t they tell us about their good fortune?

No new jobs will be forthcoming: Many studies of big box impacts have shown that every new job in a Big Box merely reduces employment in the existing smaller local enterprises. Costco is notorious for having no sales help and no signs to direct you around their huge warehouse. In our local stores we do get personal attention.

Impact upon existing businesses will be devastating: The City Council’s staff appear to have an irrational faith that more sale taxes can be sucked out of our local citizens at a time when the whole economy is slouching towards another major recession. After all, we have only so many shoppers in the area and they’re not getting any richer.
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9 Comments

Don’t the people on the city council realize there is only so much money to go around? The only new sales tax revenue the city would receive from Costco would be from the handful of people who now travel to Santa Rosa to shop. Other than that, any increase in sales tax from Costco will be cancelled out by a decrease in taxes collected from other retail stores in town where people would have gone. The net gain, if any, probably won’t even be enough to cover the interest on the loan to build Costco a new freeway interchange.
Get rid of Walmart and I will welcome a Costco, but two big box stores in such a small town will only put result in the loss of more local businesses and the further deterioration of downtown Ukiah.

Get real. More than two thousand members from Ukiah visit Costco in Santa Rosa monthly leaving thousands of dollars in sales tax in Sonoma county. This does not take in account for the many dollars we spend in traveling down there. I still shop at Schats bakery, TDS tire, and local grocery stores, even after I have spent thousands of dollars at Coscto. So the argument that it will take a toll on local stores is a joke.

Very Important…the money that is spent in a Costco or Wal-Mart
LEAVES town. That money does not travel in circles as it does when the
money is spent in locally owned stores. It’s simple.
The big box stores take the money out of town..forever. the money does not come
back , and day by day and dollar by dollar the town gets poorer and poorer.

Comparing Costco to Wal Mart is an injustice. Costco pays its employees a much better wage and I believe with benefits, this is why Costco employees stay on for a long time. Seems to me if employees are being paid a decent wage they will spend it in the community?
As for a handful of people going to Santa Rosa, maybe the numbers Costco sees going to Santa Rosa is more than a hand full? For a reality check, Wal Mart is no Costco!

Hell, I remember 40 years ago, owner of the Thomas Pear Orchards used the … ‘to keep people from going down to Costco argument’ so he could build Pear Tree Shopping Center, if I recall there are a few ‘small box’ stores at Pear Tree Shopping Center?

Of course Costco may have an impact on something, change always does, as for its evil or good this remains to be seen. I have seen the fairly new Costco in Woodland grow and create well paying jobs and build its customer along with its tax base, though it may be out of the city limits?

Lets face it Wal Mart and every other big or small box store and non box store doesn’t want Costco competing with them, seems to me as Adam Smith suggested competition is for the better.

Leefeller Guy argues that CostCo pays a better wage than Walmart. This is correct but its not pig heaven at CostCo either. In Mendocino County, the iiving wage for a family of four is over $20.00 per hour. The Assistant Cashiers at CostCo make $11.80 and the full cashiers $15.00. This means a 2nd job in the evenings, or a mother with small children working part time just to subsist. I’m afraid the comparison to Pear Tree has little relevance. The Market studies done by Walmart back in 2012 predicted that the Lucky Supermarket in Pear Tree Plaza which is unionized and provides medical insurance would shut down as soon as Walmart expanded their Superstore.

Jim so you find my comment arguing? I offered my feelings about Costco you offered yours, guess we can call it arguing since we have differences? “In Mendocino County, the iiving wage for a family of four is over $20.00 per hour”, if this is so, Costco must really be screwing their employees working in the Bay Area, could you cite a source for the $20.00 per hour number, it seems quite high for our area? Again comparing Walmart to Costco, is not even close in my book. You state Walmart has no relevance to the discussion then you comment on Walmart? Sorry Jim your speculations are just that, predetermined speculations.
By the way Jim what is a handful of people? Even so it seems us hand full of people is apparently attractive to Costco, so they are opening their doors just for the three of us? So tis, me, myself and I as a handful of people would like to see Costco in the Ukiah area. I really do not care if Costco is in city limits of Ukiah. Referring to those of us who trek on down to Santa Rosa as a small handful of people seems to be the meat of your point? from what I know all three of us live elsewhere in the county. besides Ukiah? Evidently my concept of pig heaven is not yours, Jim.

Costco pays MUCH more than Wal-Mart or the locally owned stores. I always find it laughable to cruise through the parking lot at Costco on the weekends only to see dozens of the “Shop Local Buy Local” bumper stickers on the cars from Ukiah. Also, our city and county which promote “shop local buy local” buying fleets of vehicles from dealers afar.
Costco would help our town in more ways than one.

1) Costco would bring shoppers from Lake County, The Mendocino Coast, and Northern Mendocino County. All of these shoppers would spend money in our city in the form of Gas, Food, maybe even lodging!

2) Costco would generate Sales Tax Revenue far exceeding the local shops…to think that people are using these small local shops rather than driving to Santa Rosa for their shopping needs is pure fantasy!

3) Because of the higher wages paid at Costco Vs. Wal-Mart and other stores: Each employee would have more disposable income at the end of the day to spend on sales tax revenue creating items such as: Cars, Home Products, Eating out at restaurants etc. This would then create more money for those people (Servers, small business owners, etc.) and they would have more disposable income to spend right her in our local economy, creating MORE tax dollars.

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